HQ 113193: Vessel Repair; 19 U.S.C. 1466; Entry No. 1511-92-100001; Maritime Administration; Undocumented vessel; NORTHERN LIGHT; Protest

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                              HQ 113193

                            August 12, 1994

VES-13-18-CO:R:IT:C   113193 GOB

CATEGORY:  Carriers

Deputy Assistant Regional Commissioner
Commercial Operations Division
Attn: Regional Vessel Repair Liquidation Unit
New Orleans, Louisiana 70130

RE:  Vessel Repair; 19 U.S.C. 1466; Entry No. 1511-92-100001;
     Maritime Administration; Undocumented vessel; NORTHERN      
LIGHT; Protest

Dear Sir:

     This letter is in response to your memorandum which forwarded
for our review and ruling the above-referenced protest on the
assessment of vessel repair duties.

FACTS:

     The record reflects that the NORTHERN LIGHT ("vessel"), which
is owned and operated by the Maritime Administration of the
Department of Transportation ("MARAD"), arrived at the port of
Morehead City, North Carolina on June 6, 1991 and filed a vessel
repair entry.

ISSUE:

     Whether undocumented MARAD RRF vessels are intended to engage
in the foreign or coasting trade, thereby subjecting such vessels
to liability under 19 U.S.C. 1466.

LAW AND ANALYSIS:

     19 U.S.C. 1466 provides for the payment of duty at a rate of
fifty percent ad valorem on the cost of foreign repairs to vessels
documented under the laws of the United States to engage in foreign
or coastwise trade, or vessels intended to be employed in such
trade.  The Customs Regulations apply this provision to government-
owned or chartered vessels "if documented with a registry,
coastwise trade, or Great Lakes trade endorsement, or if
undocumented, intended to engage in foreign, coastwise, or Great
Lakes trade..."  (emphasis supplied.) 19 CFR 4.14(a)(2)(ii).

                              - 2 -

     To conclude that the repairs made to the subject vessel are
subject to duty, we must first determine whether the vessel was
intended to engage in the foreign or coastwise trade.  Foreign
trade is defined as the "commercial interchange of commodities
between countries; export and import trade."  Black's Law
Dictionary (5th Ed. 1979).  Further, the word "trade" indicates
buying and selling for a profit.  American Heritage Dictionary of
the English Language (2nd Ed. 1985).  The Customs Service has held
that government-owned, but privately-operated vessels engaged
exclusively in the carriage of government cargo are not engaged in
the foreign or coasting trade within the meaning of 19 U.S.C. 1466. 
C.I.E. 202/48, dated June 4, 1948.  Moreover, undocumented vessels
that are not intended to engage in the foreign or coasting trade
are not required to file a vessel repair entry.  Id.; C.I.E.
2335/66, dated November 30, 1966.

     Whether an undocumented vessel is intended to engage in trade
must be established through the submission of evidence on the use
of the vessel.  The protestant has submitted documentation to
establish that its RRF ships are not permitted to engage in
commercial trade.  While such ships are activated, the ships are
under operational control of the Military Sealift Command ("MSC"). 
The vessel masters will respond to "all directives and instructions
received from COMSC (the Navy's Sealift Type Commander) and
cognizant Navy OPCON authorities," for MSC point-to-point cargo
operations.  Further, no ship or ships of the RRF are permitted to
carry or to store non-defense related cargo without Department of
Defense concurrence.  Memorandum of Understanding between the
Department of Defense and the Department of Transportation ("MOU"),
Article 7.  The MOU specifically states that activated RRF ships
shall not compete with, substitute for, or displace privately-
owned United States-flag vessels.

     Based on the record, we find that undocumented MARAD RRF
vessels that have been activated under MSC control do not carry
commercial cargo and are therefore not intended to engage in the
foreign or coasting trade.  Such vessels are therefore not subject
to vessel repair duties under 19 U.S.C. 1466.  

     This determination applies only to undocumented vessels owned
by MARAD.  Documented vessels owned or operated by the MARAD
continue to be subject to vessel repair duties under 19 U.S.C.
1466.
     
     This determination is consistent with previous rulings,
including 112115 dated May 18, 1993, with respect to MARAD RRF
vessels.





                              - 3 -

HOLDING:

     Undocumented MARAD RRF vessels that have been documented under
the control of the MSC do not carry commercial cargo and are
therefore not intended to engage in the foreign or coasting trade. 
Such vessels are therefore not subject to vessel repair duties
under 19 U.S.C. 1466.  Accordingly, the subject vessel is not
subject to 19 U.S.C. 1466.  The protest is granted.
     
     In accordance with Section 3A(11)(b) of Customs Directive 099
3550-065, dated August 4, 1993, Subject: Revised Protest Directive,
this decision should be mailed by your office to the protestant no
later than 60 days from the date of this letter.  Any reliquidation
of the entry in accordance with the decision must be accomplished
prior to mailing of the decision.  Sixty days from the date of the
decision the Office of Regulations and Rulings will take steps to
make the decision available to Customs personnel via the Customs
Rulings Module in ACS and the public via the Diskette Subscription
Service, the Freedom of Information Act and other public access
channels.

                              

                              Sincerely,



                              Arthur P. Schifflin
                              Chief
                              Carrier Rulings Branch